BLOG VIEW: The Buck Stops…Somewhere Else

Last week, the Associated Press published an article about the people running the major banks that received billions in Troubled Asset Recovery Program (TARP) funds. According to the article, 87% of the top senior executives at these banks have been at their jobs since 2006. Translated: Those who were at the steering wheel when the banks veered off the road are still at the steering wheel.

This is a fairly troubling discovery, especially when one considers there is a contradiction regarding which executives get to stay and which get the door in regard to federal bailouts. When Fannie Mae and Freddie Mac were taken into conservatorship, their respective executive leaders were sent packing in favor of government-picked replacements. Even sleepy little Farmer Mac, which had a near-lethal tumble last year, saw the forced departure of its president and CEO, Henry D. Edelman, after two decades of exemplary service.

But there have been no demands from the federal government to change the leaders of the banks that are receiving the TARP funds. In a way, this is understandable – an argument can be made that the federal government doesn't have the right to tell private-sector companies who they can or cannot put in the C-suite.

However, there is also the principle of the golden rule: The one with the gold makes the rules. If the wobbly banks needs taxpayer cash infusions to get back to health, then the taxpayers – or, at the very least, their Washington proxies on both ends of Pennsylvania Avenue – should have a say in who is going to spend their money.

Considering that the senior executives of the TARP-funded banks were ultimately responsible for what took place, it is difficult to maintain faith in their abilities to lead. If anything, their track record is dismal – well-run institutions don't collapse at Ben Bernanke's feet.

Equally upsetting is the reality of which people in these bailed out banks are getting the boot. The Associated Press article discovered that JPMorgan Chase & Co. is shedding roughly 10% of its investment bank staff, but CEO James Dimon is not being asked to step aside. Capital One Financial Corp., which bought Greenpoint Mortgage in 2006, dropped 1,900 employees following Greenpoint's demise. But CEO Richard Fairbank and the top executives at Capital One were not among those facing a future on the unemployment line.

The ultimate question arising from the TARP relief effort is simple: Who is going to take responsibility for today's crisis? I have yet to hear the senior executives of the troubled banks step forward and acknowledge they bear any responsibility for the massive losses generated by their institutions. And for that matter, the directors of these institutions have also been conspicuously quiet in regard to this situation.

And this is separate and apart from the recent news about the Wall Street executives and their extraordinary $18 billion bonuses – President Obama's condemnation of that figure as ‘shameless’ is perhaps the mildest thing anyone can possibly say about that travesty.

I am reminded of the small sign that Harry S. Truman kept on his desk during his presidency. The sign read ‘The Buck Stops Here,’ and it perfectly summed up Truman's willingness to accept the full responsibility of the many difficult tasks that he was forced to face during his White House years.

But you won't find that Trumanesque willingness to accept responsibility for leadership decisions – good, bad or indifferent. Today, the preferred sign in the TARP-backed banks appears to be very, very different: ‘Business As Usual.’ And that's the wrong sign for today's business environment.